Today the Exchequer Secretary to the Treasury, James Murray, made a Written Ministerial Statement outlining a range of administration and simplification measures which support our ambition to modernise the tax and customs system.
This email provides you with information on the key measures announced that will directly affect you, as well as information that might be useful for your clients, or that you may receive enquiries about.
Key tax measures are detailed below. Information on all Tax update spring 2025: Simplification, Administration and Reform (TUSAR) measures can be found in the Tax update spring 2025 page on GOV.UK. |
| Mandating the payrolling of benefits in kind update |
The government has announced additional time to prepare for the introduction of mandatory reporting and paying of Income Tax and Class 1A National Insurance Contributions (NICs) on benefits in kind via payroll software. Mandatory payrolling will be introduced from 6 April 2027 instead of 6 April 2026 to provide more time for employers, payroll professionals, software providers, tax agents and other stakeholders to prepare for the change.
HMRC has published an updated technical note which provides more operational information on how employers can adapt to these changes in time for 6 April 2027. |
| Income Tax Self Assessment (ITSA) criteria review |
The ITSA reporting thresholds for trading, property and ‘other taxable’ income will be aligned and changed to £3,000 (gross) each. This change to the threshold for income to be reported through Self Assessment does not affect the amount of tax due. The £1,000 tax-free trading allowance will remain the same.
The reporting threshold changes will remove the requirement for up to 300,000 taxpayers to submit a Self Assessment return. Instead, people will be able to report taxable income which is below the new ITSA thresholds through a new digital reporting service. Taxpayers will have a choice, they can remain in Self Assessment if they wish or use the new service.
The changes will take place within this Parliament, with further detail set out on publication of the transformation roadmap later this year. |
| Check Employment Status for Tax (CEST) digital tool revisions |
| HMRC is revising its CEST digital tool with effect from 30 April 2025. These changes will make it easier to use the tool and receive an accurate outcome. To support these changes, HMRC will also publish updated guidance that offers help on how to answer the revised questions. |
| Employment related securities – employer’s NICs elections process |
| From 1 May 2025 the process to make a joint election will be simplified as employers will no longer need to submit the election form to HMRC for pre-approval, where the employer is using the new election form template on GOV.UK. The new pre-approved template, which will be available for use from 1 May 2025, will ensure consistency and accuracy, without the requirement to send it to HMRC for approval. |
| Capital Goods Scheme simplification |
The government will simplify the Capital Goods Scheme by removing computers from the assets covered by the scheme and increasing the capital expenditure value of land, buildings and civil engineering work to £600,000 (exclusive of VAT). This simplification will reduce the number of capital assets that would fall within the Capital Goods Scheme, therefore reducing the administrative burden on small businesses.
These changes will take effect at a later date within this Parliament. |
| Consultations on transfer pricing |
The government has today published 2 consultations, which represent a balanced package of proposals on international tax reform.
The first, Reform of UK law in relation to transfer pricing, permanent establishment and Diverted Profits Tax, is a technical consultation on draft legislation.
The intention of the proposed reform is to simplify and update some of the UK’s international tax rules and align them more closely with the UK’s treaty obligations.
The second, transfer pricing: scope and documentation, is a policy consultation on 2 related proposals: |
1) the first is to better define and defend the UK tax base by removing the exemption from transfer pricing for medium-sized businesses, whilst retaining an exemption for small businesse
2) the second is to introduce a requirement for multinationals to report information on their cross-border related party transactions to HMRC through a new International Controlled Transactions Schedule (ICTS) – the ICTS would focus on objective and readily available information that will help facilitate better identification of transfer pricing risk and allow for more efficient, targeted compliance activity |
Both consultations are open for feedback until 7 July 2025. |
| Vaping Products Duty consultation response |
The government will introduce the Vaping Duty Stamp (VDS) scheme alongside Vaping Products Duty (VPD) on 1 October 2026. All vaping products manufactured in, or imported into, the UK after this date must have a stamp affixed unless in duty suspense arrangements. HMRC will appoint a commercial supplier to produce and supply duty stamps. Overseas manufacturers must appoint a HMRC-approved UK representative who will be responsible for their stamps.
The government is introducing a Nicotine Approval Scheme (NAS) to mitigate the risks of illicit vaping product production by controlling the supply of non-retail nicotine solutions, a key ingredient in most vaping products. The scheme will be consulted on in due course. |
| Tax Administration Framework Review (TAFR) compliance – improving HMRC’s approach to dispute resolution |
The government has published a consultation seeking views on options for simplifying, modernising and reforming HMRC’s approach to dispute resolution. Reform is being driven by an aim to resolve cases earlier and more effectively with dispute resolution methods.
The consultation is open for feedback until 7 July 2025. |
| Removing some non-statutory letters and working with stakeholders to improve others |
To support HMRC’s ambition to be digital first, from June 2025 we’ll no longer send a selection of non-statutory Corporation Tax letters to customers for information that can be accessed online.
Customers who don’t interact with us online will still receive statutory communications by post and all new Corporation Tax customers receive information on the reporting and payment process, with instruction on how to find guidance on GOV.UK.
There are no changes to the Corporation Tax process and further details of the plans to remove letters will be provided in the coming months.
In addition, HMRC will work with the Administrative Burdens Advisory Board (ABAB) and other stakeholders to enhance its work to simplify the language used in print and digital letters. This is to make sure our communications are accessible and easy to read, simplifying the tax system and providing a better service to customers. |
| Reducing postal outputs |
HMRC will move much of what it currently sends out by paper into a digital format saving £50 million in print and postage costs annually by the 2028 to 2029 tax year, whilst maintaining paper post provision for certain critical correspondence and for the digitally excluded.
Many of the letters being sent to customers can be accessed in the HMRC app or online services – giving people instant access to important letters and bringing down costs to taxpayers by saving on paper, print and carrier costs.
HMRC will work closely with stakeholders as they make these changes and ensure that those customers who are digitally excluded continue to receive the information and support they require.
You can opt to go paperless in the HMRC app to reduce the number of letters you receive from HMRC.
Information on all the TUSAR measures announced today can be found in the Tax update spring 2025 page on GOV.UK. |
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